Falloon tactic exploits loophole

Ten Network Holdings
has taken the governance low road by refusing to put executive chairman
Nick Falloon
up for election at the December 9 annual general meeting in Sydney.

Ten’s general counsel, Stephen Partington, has confirmed the tactic on the basis that Ten is now looking for an independent non-executive chairman so that Falloon will become the managing director and be exempt from corporate elections under the Corporations Act.

Falloon was last re-elected as executive chairman in 2007 so his three-year term is up. Just because he’s worried shareholders will oppose his re-election is no excuse for exploiting this loophole given that he will still be the executive chairman presiding over the AGM.

Other major Australian executive chairs such as Gerry Harvey, Kerry Stokes, James Packer and Frank Lowy all submit themselves for election every three years.

The only two who used to take the governance low road were John Gay at Gunns and Rupert Murdoch at News Corp. Gay changed his ways in 2006 and has now resigned, while Murdoch took News Corp to Delaware in 2004 and was finally re-elected at an AGM for the first time in decades in 2007.

It’s time for the federal government to close the loophole that exempts a managing director from corporate elections. It should be called the “Nick Falloon amendment".